Deck 23: International Finance

Question 1

Net exports represent the difference between exports and imports.

Answer 1

True

Question 2

Everyone agrees that globalization causes greater income inequality between rich and poor countries.

Answer 2

False

Question 3

Harvard University admits a larger percentage of applicants than does India's Indian Institute of Technology.

Answer 3

True

Question 4

Studies have shown that tipping is much less common in countries where caring and personal relationships are highly valued,as opposed to the values of success and materialism.

Question 5

In recent years,tariff rates have declined in the United States,China,and India.

Question 6

The J-curve summarizes the phenomenon that occurs when import spending initially falls after a depreciation of a country's currency and then import spending later rises.

Question 7

The average tariff rate in the US today is about 40 percent,but it was only 1.6 percent in 1946.

Question 8

In a two-country world (consisting of country X and country Y),an increase in Real GDP in country X will shift country Y's AD curve leftward.

Question 9

The consumer price index (CPI)increased at a slower rate during the period 1990-2004 than the import price index.

Question 10

In recent years,the Chinese government's actions have had an impact on interest rates in the United States.

Question 11

International trade (a key component of globalization)has been linked to lower prices in numerous studies.

Question 12

With globalization,the world is moving from hundreds of national economies toward one large world economy.

Question 13

Globalization first appeared on the world stage two decades ago.

Question 14

An example of offshoring is when a foreign country sets up operations in the United States and employs American employees.

Question 15

Capitalism is the economic system that best describes what is currently happening in the world economy.

Question 16

When World War II ended,the new era of globalization began.

Question 17

All economists agree that the worldwide benefits of globalization are likely to be greater than the worldwide costs.

Question 18

A depreciation of the dollar relative to another currency will raise U.S.exports,lower U.S.imports,and raise U.S.net exports.

Question 19

Globalization is necessarily bad for U.S.workers.

Question 20

Computers and the Internet make it possible for people to communicate with others over long distances,reducing the probability that people will trade with one another.

Question 21

Which of the following factors are repeated in many different definitions of globalization?

A)creation of a smaller world
B)movement toward a world economy
C)people living across the world from one another having a greater impact upon each other
D)all of the above

Question 22

Fifteen years ago,China _________________ with the countries of Europe.Today,China ______________________ most European countries.

A)traded a great deal;is not a trading partner with
B)traded a great deal;is rarely a trading partner for
C)did not trade much;is one of the top five trading partners for
D)did not trade much;is rarely a trading partner for

Question 23

Expansionary fiscal policy raises Real GDP more in a closed economy than in an open economy.

Question 24

According to J-curve theory,imports initially increase after a country's currency depreciates,but in the long run imports decrease.

Question 25

In economics,the term foreign exchange trading means

A)buying and selling foreign goods.
B)buying and selling foreign services.
C)buying and selling foreign assets (such as,real estate).
D)buying and selling foreign currencies.

Question 26

In 1946 the average tariff rate in the United States was around ___________ percent,while the average tariff in 2012 was about ____________ percent.

A)14.0;2.4
B)18.7;12.8
C)40.0;1.8
D)30.2;21.0

Question 27

When the dollar depreciates,this shifts the AD curve rightward and the SRAS curve leftward,leading to a higher price level.

Question 28

Increased deficit financing,following the use of expansionary fiscal policy by the U.S. ,will raise U.S.interest rates and causes the dollar to appreciate.

Question 29

When the dollar depreciates,this shifts the AD curve rightward and the SRAS curve leftward,which will always lead to a higher Real GDP.

Question 30

When the dollar appreciates,this shifts the AD curve leftward and the SRAS curve rightward,which will typically lead to an unchanged Real GDP.

Question 31

According to the textbook,some people refer to the period from ___________________ as the First Era of globalization.

A)the late 1700s to the late 1800s
B)the mid-1900s to the late 1980s
C)the late 1600s to the mid-1800s
D)the mid-1800s to the late 1920s

Question 32

In the early 1900s tariffs accounted for ____________ of all federal government revenues,whereas today they account for less than ____________ percent.

A)one-tenth;4
B)half;0.5
C)one-quarter;5
D)half;2

Question 33

According to the textbook,in which of the following countries was tipping found to occur very infrequently?

A)Mexico
B)United States
C)Egypt
D)Vietnam

Question 34

In recent years,the Chinese government has _____________ bonds issued by the U.S.government which has _____________ interest rates in the United States beyond what they would have been otherwise.

A)bought;lowered
B)bought;raised
C)sold;lowered
D)sold;raised

Question 35

Globalization is closely aligned with which of the following?

A)increased free enterprise
B)more government control of markets
C)less freedom of movement for people
D)less freedom of movement for goods

Question 36

A depreciation in the dollar relative to the yen would make Japanese-produced input X more expensive for U.S.producers.

Question 37

When real interest rates fall in the United States relative to interest rates in Japan,the yen appreciates and the dollar depreciates.

Question 38

Globalization

A)is the growing integration of the national economies of the world to such an extent that a single worldwide economy may be emerging.
B)is any type of foreign trade.
C)is specifically foreign trade between countries that have entered into a formal free trade agreement.
D)will necessarily lead to higher unemployment rates in the United States.

Question 39

The Cold War

A)hampered globalization because it created a political barrier between countries which reduced the likelihood that those countries would engage in trade with one another.
B)enhanced globalization because it helped to encourage countries to engage in trade with one another.
C)ended with the building of the Berlin Wall in the early 1960s.
D)a and c

Question 40

In a two-country world consisting of Japan and the United States,a contraction in the Japanese economy will lead to lower Real GDP in the United States.

Question 41

Between 1990 and 2003,college tuition went up 130 percent,which is __________ the increase in the prices of housing,gasoline,and medical care.

A)slightly more than
B)less than
C)about the same as
D)considerably more than

Question 42

One study from the United Kingdom (cited in the textbook)showed that almost ______ times as many firms that faced global competition reported innovations in product or process compared to firms that did not face global competition.

A)three
B)six
C)nine
D)twelve

Question 43

Which of the following statements is true?

A)Economists are fairly certain that globalization leads to an increased standard of living.
B)During the 1990s,the annual percentage change in output per person was negative in globalized developing countries,but positive in less globablized countries.
C)When it comes to globalization it is generally easier to see the benefits than to see the costs.
D)The benefits of globalization are more visible than the costs,since they tend to be concentrated on a relatively smaller group of people.

Question 44

Which of the following statements is false?

A)India and China are examples of countries that have been opening up their economies to globalization.
B)Globalization will cause some people to lose jobs,but even without globalization,some people will lose jobs.
C)The end of the Cold War is one of the factors that many believe has lead to an increase in globalization.
D)Income per person has decreased in China and India in recent decades.

Question 45

Economist David Friedman has compared free international trade to

A)the Holocaust.
B)the Cold War.
C)a technology.
D)a revolution.

Question 46

North Korea has ____________ the process of globalization,while South Korea has _______________ it.A likely result of this is that South Koreans have a much ______________ standard of living than North Koreans.

A)embraced;avoided;higher
B)embraced;avoided;lower
C)avoided;embraced;lower
D)avoided;embraced;higher

Question 47

Which of the following statements is false?

A)In recent years,the Chinese government has bought U.S.government bonds,raising interest rates in the United States.
B)Among the key features of globalization is the growing integration of the national economies of the world.
C)Globalization is associated with a movement toward more free enterprise.
D)It is becoming increasingly common for Americans to work for foreign companies that have offices in the United States.

Question 48

Between 1940 and 2000,income per person in China

A)doubled.
B)tripled.
C)quadrupled.
D)decreased by 5 percent.

Question 49

The problems of physical distance can be _____________ by technology which can serve to ___________ trade.

A)increased;discourage
B)reduced;enhance
C)increased;enhance
D)reduced;discourage

Question 50

It is often easier to see the ___________ of globalization than it is to see the _____________.This is because the costs tend to be more ________________,while the benefits tend to be __________________.

A)costs;benefits;concentrated;widely dispersed.
B)benefits;costs;concentrated;widely dispersed.
C)costs;benefits;widely dispersed;concentrated.
D)benefits;costs;widely dispersed;concentrated.

Question 51

In 2000,the top 100 transnational companies produced about _____________ percent of the entire world's output.

A)2.1
B)4.3
C)10.5
D)22.1

Question 52

_______________ is the practice of hiring people in other countries to do a job that was once done domestically.

A)Offshoring
B)Onshoring
C)Insourcing
D)Megasourcing

Question 53

Between 1980 and 2000,income per person in India

A)doubled.
B)tripled.
C)quadrupled.
D)decreased by 25 percent.

Question 54

Economists are fairly confident that globalization leads to a(n)_____________ standard of living based on their comparisons of countries with __________________ characteristics.

A)increased;similar
B)increased;very few similar
C)decreased;similar
D)decreased;very few similar

Question 55

If an economy's exports are $600 billion and its imports are $750 billion,its net exports are

A)$1,550 billion
B)$150 billion
C)-$150 billion
D)1.07.

Question 56

In 2000,the top 100 transnational companies produced about _____________ percent of the entire world's output,which was approximately as much as what ________________ produced that year.

A)4.1;Japan
B)4.3;the United Kingdom
C)10.9;China
D)25.1;the United States

Question 57

Some of the benefits of globalization include

A)increased international trade.
B)greater income per person.
C)lower prices for goods.
D)greater product variety.
E)all of the above

Question 58

The end of the Cold War is generally marked by the fall of the Berlin Wall in

A)1961.
B)1969.
C)1979.
D)1989.
E)1994.

Question 59

The _____________ the size of the potential customer base for a given product (for example,music),the ______________ is the variety of goods we are likely to see.

A)larger;greater
B)smaller;smaller
C)larger;smaller
D)smaller;greater
E)a and b

Question 60

Between 1977 and 2004,the inflation-adjusted prices for an array of goods traded between countries __________ while the inflation-adjusted prices for an array of goods not traded between countries _____________________.

A)fell;increased.
B)rose;increased as well.
C)fell;decreased as well.
D)rose;decreased.

Question 61

If Japan's Real GDP rises,this tends to _________________ United States exports,shifting the United States AD curve to the __________________.

A)raise;right
B)raise;left
C)lower;right
D)lower;left

Question 62

As the dollar depreciates,the dollar price of imported goods _________,ultimately shifting the United States AD curve __________________.

A)rises;rightward
B)rises;leftward
C)falls;rightward
D)falls;leftward

Question 63

If Germany's Real GDP falls,this tends to ______________ United States exports,shifting the United States AD curve to the ________________.

A)raise;right
B)raise;left
C)lower;right
D)lower;left

Question 64

As the dollar depreciates,the foreign price of United States goods _________________,ultimately shifting the United States AD curve _____________.

A)rises;rightward
B)rises;leftward
C)falls;rightward
D)falls;leftward

Question 65

Suppose United States net exports are -$50 billion.Then the dollar depreciates.In the short run,the United States may move downward along the J-curve,with net exports _________ and the AD curve shifting to the _______________.

A)coming closer to zero;left
B)coming closer to zero;right
C)moving further from zero;left
D)moving further from zero;right

Question 66

Suppose the price level in Germany rises,ceteris paribus.This ________________ United States net exports,ultimately shifting the United States AD curve ____________________.

A)stimulates;rightward
B)stimulates;leftward
C)depresses;rightward
D)depresses;leftward.

Question 67

In the short run following a depreciation of the dollar,the United States may move downward along the J-curve since it is likely that the United States

A)spends more dollars on imports.
B)spends fewer dollars on imports.
C)sells an increased dollar amount of exports.
D)sells a reduced dollar amount of exports.

Question 68

As the dollar appreciates,the dollar price of imported goods ___________ ultimately shifting the United States AD curve to the _______________.

A)rises;right
B)rises;left
C)falls;right
D)falls;left

Question 69

A rise in net exports shifts the

A)AD curve leftward.
B)AD curve rightward.
C)SRAS curve leftward.
D)SRAS curve rightward.

Question 70

Suppose a British camera has a price of 200 British pounds.To a United States camera importer,its price rises from $360 to $380.This might happen when the dollar ________________ against the British pound,which means the British pound has a __________ dollar price.

A)depreciates;higher
B)depreciates;lower
C)appreciates;higher
D)appreciates;lower

Question 71

If the United States goes into a recession,this tends to shift Japan's AD curve _______________ because Japan will ___________________.

A)rightward;import less from the United States
B)rightward;export less to the United States
C)leftward;import less from the United States
D)leftward;export less to the United States

Question 72

Suppose the price level in Germany falls,ceteris paribus.This _________________ United States net exports,ultimately shifting the United States AD curve __________________.

A)stimulates;rightward
B)stimulates;leftward
C)depresses;rightward
D)depresses;leftward

Question 73

Suppose we import only one good from Germany: cars.Initially,the exchange rate is $0.60 per euro.We import 150,000 cars annually,priced at 70,000 euros each.Then the euro rises to $0.625.Assuming the dollar value of our exports to Germany remains constant,we will stop moving down the J-curve and "turn the corner" to move upward along it once we import ______________ German cars per year.

A)fewer than 150,000
B)fewer than 144,000
C)fewer than 93,750
D)more than 150,000
E)more than 156,250

Question 74

When the United States recovers from a recession,this tends to shift Germany's AD curve _________________,which _____________ Germany's price level.

A)rightward;raises
B)rightward;lowers
C)leftward;raises
D)leftward;lowers

Question 75

When the United States is moving downward along the J-curve,its trade balance is ______________ as an immediate after-effect of a____________________ of the dollar.

A)improving;depreciation
B)improving;appreciation
C)worsening;depreciation
D)worsening;appreciation

Question 76

If Japan's Real GDP falls,this tends to _________________ United States exports,shifting the United States AD curve to the _____________________.

A)raise;right
B)raise;left
C)lower;right
D)lower;left

Question 77

Suppose a case of French wine has a price of 1,500 euros.To a U.S.wine importer,its price falls from $300 to $280.This could happen as a result of the dollar ___________ against the euro,which means the euro has a ____________ dollar price.

A)depreciating;higher
B)depreciating;lower
C)appreciating;higher
D)appreciating;lower

Question 78

If an economy's exports are $560 billion and its net exports are -$130 billion,its imports are

A)$690 billion.
B)$430 billion.
C)-$430 billion.
D)-$690 billion.

Question 79

As the dollar appreciates,the foreign price of United States goods ______________,ultimately shifting the United States AD curve ________________.

A)rises;rightward
B)rises;leftward
C)falls;rightward
D)falls;leftward

Question 80

If Germany's Real GDP rises,this tends to ________________ United States exports,shifting the United States AD curve to the ___________________.

A)raise;right
B)raise;left
C)lower;right
D)lower;left